January 20, 2011

The Free Market Can't Deliver Health Insurance. At all. Ever.

We are being deluged from both left and right with healthcare nonsense. Rachel Maddow, a fan of Obamacare, reported on Tuesday that the health insurance lobby has not pushed for its repeal. But she utterly missed the significance of this fact, because she and many others wrongly think the healthcos oppose Obamacare. Actually, they want it, and they own the federal government, so there is no chance it will be undone.

Why did the healthcos push Obamacare upon us? They realized that even under the rigged system of recent years, they were doomed. As heathcare costs rose for decades, insurers simply raised policy prices. But for the past 15 years their market penetration has been dropping, as more and more employers cut healthcare benefits. The healthcos saw that raising prices further would induce even faster decline of policy purchases. Selling health insurance, especially in a free market, had become an impossible business proposition. They were staring into a death spiral.

So they turned to government and pushed for Obamacare, which gives them guaranteed customers, a hand in the public till, and the opportunity to profit even more on the higher prices they will charge for policies with limited treatment denials. Appropriately, their stocks surged when 'healthcare reform' passed.

Libertarians and free market advocates in Congress can rave on, seeking repeal of Obamacare. But insurers won't let repeal happen. If it did, they'd be toast. Even if we did turn to free market health insurance, we couldn't have it. It's impossible. Can't happen. Time to look elsewhere.

For lower costs and universal coverage, let's go for single payer at the state level.